Dive Brief:

• Online-only fintech Varo Bank tapped Amazon and Zillow alum Allen Parker to serve as its CFO as part of a shift on its executive leadership team, the bank said in a Tuesday press release.
• The San Francisco-based fintech also promoted company veteran Raktim Mitra to the role of chief lending officer, according to the release.
• “Allen has the perfect background to take Varo Bank to our next phase of growth, with both public and private market experience,” Varo CEO Colin Walsh said in a statement emailed to CFO Dive. “At Zillow, Allen also helped shape an industry with its digital transformation; that’s exactly the journey that Varo is leading the banking industry through.”

Dive Insight:

Parker joins the fintech, which describes itself as a “consumer techbank,” after a five-year stint at home listing service Zillow, where he most recently served as an adviser after more than four years as its CFO, according to his LinkedIn profile. He also worked at Amazon for 13 years in a variety of financial and operational roles, including as VP of finance, Amazon Device & Appstore. Before Amazon, he logged a five-year tenure at General Electric.

Mitra, meanwhile, is transitioning into the chief lending officer position after joining Varo in January 2022 as its head of lending, according to his LinkedIn profile. Before Varo, he served as senior director for online used car website Carvana.

The executive leadership changes come as Varo looks to reignite its path to profitability after struggling to reduce its cash burn and to attract new users following recent upheaval in the banking space. The fintech made headlines in 2020 as the first neobank — a financial entity that operates exclusively online without physical branches — to receive a national bank charter from the Office of the Comptroller of the Currency.

Since gaining its charter, Varo has moved rapidly to establish its place in the banking sector alongside both its fellow neobanks and incumbents, launching new products including its “Varo to Anyone” peer-to-peer payments service in October and a free tax preparation and filing service via a partnership with embedded tax provider Column Tax in January, according to a report by Industry Dive sister publication Banking Dive.

Still, like other fellow neobanks, Varo has struggled to achieve profitability; a May 2022 study by Simon-Kucher noted only 5% of such banks were profitable, and profitable challenger banks remain in the minority despite an encouraging pivot to focus on sustained growth, according to an October update on the study.

The route to profitability for online banks, including Varo, has only become more challenging amid recent turmoil in the banking industry. Varo faced a significant cash crunch in 2022, running through $84 million in its first quarter for that year at a burn rate that put its future ability to operate in jeopardy, Banking Dive reported at the time.

In 2023, news circulated that the fintech was planning to raise $50 million in new equity funding in a round led by Warburg Pincus, according to a March report by TechCrunch. The neobank was reportedly looking to raise the funding at a pre-money valuation of $1.8 billion, a notable down round from the $2.5 billion valuation it saw in 2021 after raising its $510 million Series E. Varo closed the $50 million round in the second quarter of 2023, the bank confirmed.

The bank took several steps to curb expenses, including outsourcing its contact centers and laying off 97 employees in May, according to a message Walsh posted on Varo’s website.

As of its most recent call report filing, Varo reported approximately $107.7 million in equity capital for the quarter that ended Dec. 31, with a net income loss of $105.2 million.